One 77-year-old’s search for the truth: 9/11, election fraud, illegal wars, Wall Street criminality, a stolen nuke, the neocon wars, control of the U.S. government by global corporations, the unjustified assault on Social Security, media complicity, and the "Great Recession" about to become the second Great Depression. "The most important truths are hidden from us by the powerful few who strive to steal the American dream by keeping We the People in the dark."

Whacking the Old Folks

In setting up his National Commission on Fiscal Responsibility and Reform, Barack Obama is again playing coy in public, but his intentions are widely understood among Washington insiders. The president intends to offer Social Security as a sacrificial lamb to entice conservative deficit hawks into a grand bipartisan compromise in which Democrats agree to cut Social Security benefits for future retirees while Republicans accede to significant tax increases to reduce government red ink.

Obama's commission is the vehicle created to achieve this deal. He ducks questions about his preferences, saying only that "everything has to be on the table." But White House lieutenants are privately talking up a bargain along those lines. They are telling anxious liberals to trust the president to make only moderate cuts. Better to have Democrats cut Social Security, Obama advisers say, than leave the task to bloodthirsty Republicans.

The president has stacked the deck to encourage this strategy. The eighteen-member commission is top-heavy with fiscal conservatives and hostile right-wingers who yearn to dismantle the retirement program. The Republican co-chair, former Senator Alan Simpson, is especially nasty; he likes to get laughs by ridiculing wheezy old folks. Democratic co-chair Erskine Bowles and staff director Bruce Reed secretly negotiated a partial privatization of Social Security with Newt Gingrich back when they served in the Clinton White House, but the deal blew up with Clinton's sex scandal. Monica Lewinsky saved the system.

Any recommendations require fourteen votes, and Obama has at least five loyalists who will protect him—Senators Dick Durbin and Max Baucus, Representatives Jan Schakowsky and Xavier Becerra, and former SEIU president Andy Stern. On the other hand, if Obama really wants to make a deal, these commissioners will very likely support him.

The people, once again, are kept in the dark. The Obama commission will not report its recommendations until after this fall's elections—too late for voters to express objections. Both parties assume they can evade blame by holding hands and jumping together.

What's extraordinary about this assault on Social Security is that a Democratic president is leading it. Obama is arm in arm with GOP conservatives like Wall Street billionaire Pete Peterson, who for decades has demonized Social Security as a grave threat to the Republic and has spread some $12 million among economists, think tanks, foundations and assorted front groups to sell his case. If Obama pulls the deal off, this will be his version of "Nixon goes to China"—a leader proving his manhood by going against his party's convictions. Even if he fails, the president will get some protective cover on the deficit issue. After all, he is targeting Big Government's most beloved and trusted program—the New Deal's most prominent pillar.

Obama's initiative rests on two falsehoods spread by Peterson's propaganda—the notion that Social Security somehow contributes to the swollen federal deficits and that cutting benefits will address this problem. Obama and his advisers do not say this in so many words, but their rhetoric implies that Social Security is a big source of the deficit problem. Major media promote the same falsehoods. Here is what the media don't tell you: Social Security has accumulated a massive surplus—$2.5 trillion now, rising to $4.3 trillion by 2023. This vast wealth was collected over many years from workers under the Federal Insurance Contributions Act (FICA) to pay in advance for baby boom retirements. The money will cover all benefits until the 2040s—unless Congress double-crosses workers by changing the rules. This nest egg does not belong to the government; it belongs to the people who paid for it. FICA is not a tax but involuntary savings.

As a candidate, Obama assured voters that any shortfall was in the distant future and could be easily resolved with minor adjustments. As president, he has abandoned this accurate analysis and turned rightward without explaining why. He faces an awkward problem, however. Despite conservative propaganda, cutting Social Security will have no impact on the deficit problem that so stirs public anxiety. The White House knows this, and some advisers admit as much. So why is the president targeting Social Security?

Paul Volcker, former Federal Reserve chair and adviser to the president, declares, "In my view, we can deal with the Social Security problem fairly promptly." Cutting benefits, Volcker adds, "is not going to deal with the deficit problem in the short run, but it's confidence building." John Podesta of the Center for American Progress, another adviser, agrees but says, "Reforms could starkly demonstrate to skeptical debt markets that the United States is willing to take on a politically difficult fiscal issue."

In other words, targeting Social Security is a smokescreen designed to reassure foreign creditors and avoid confronting the true sources of US indebtedness. The politicians might instead address the cost of fighting two wars on borrowed money or the tax cuts for the rich and corporations or the deregulation that led to the recent financial catastrophe and destroyed vast wealth. But those and other sources of deficits involve very powerful interests. Instead of taking them on, the thinking in Washington goes, let's whack the old folks while they're not watching.

This issue is a seminal fight with the potential to scramble party politics. If Democrats can no longer be trusted to defend Social Security, who can be? The people from left to right overwhelmingly support the program (88 percent), and a majority (66 percent) believe benefits should be increased now to cope with the loss of jobs and savings in the Great Recession.

Citizens can win this fight if they mobilize smartly. We can do this by arousing public alarm right now, while members of Congress face a treacherous election and before Obama can work out his deal. Some liberal groups are discussing a "take the pledge" campaign that demands senators and representatives sign commitments to keep Hands Off Social Security Benefits. If politicians refuse to sign, put them on the target list for November. Barack Obama is standing on the third rail of politics—let's give him a warning jolt.

Blogger's Note 1: The remarkable coincidence of the number 23 is real. Find the first number here and see the article below for the second one. To put this all in perspective, $23 Trillion is about 1 1/2 times the U.S. GDP or the money supply. The recipients of this inflationary largess have been the very people who have busted our economy, whereas the folks who are now being denied 0.1% of that amount for reasons of "fiscal responsibility" are the very ones who teach our children! What kind of country do we live in anyway?

Bloggers's Note 2: I'm running a survey: If you could meet face-to-face the Congress persons who are now saying things like "Given the size of the current federal deficit, I have reservations about the federal government taking on greater responsibility for education funding," what words would you use to tell them what you think of them? Please give your answer by clicking "comments" at the bottom of this post and expressing yourself freely...
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Washington - Congress bailed out Wall Street and the auto industry, but it appears to have drawn the line — at least for now — at rescuing teachers.

A Democratic plan to send $23 billion to the states to save the jobs of 100,000 to 300,000 public school teachers, librarians, counselors and other employees slated for layoffs looks dead for the time being.

Blame it on election-year politics. The anti-Washington, anti-spending mood has become so potent that even Democrats are antsy about helping teachers, one of their most long-standing and generous allies.

"We are in a situation now where a portion of our caucus is rebelling against just about any kind of spending," said Democratic Rep. Emanuel Cleaver of Missouri.

The layoffs already have begun. Advocates for teachers are calling them catastrophic. Critics of the emergency aid say states need to clean up their fiscal acts and make changes.

In the meantime, large, populous states such as California and Texas, for example, are each expected to absorb the loss of more than 30,000 teachers and other personnel, according to White House estimates.

Schools are cutting staff and programs because the recession has depleted state tax revenues, which pay for public education.

Democrats in the House of Representatives had hoped to pass the $23 billion emergency bailout this week as part of a spending bill for the war in Afghanistan that was slated for passage, but fiscally conservative members from tough districts weren't happy about having to defend another vote that would increase the deficit.

The school aid measure never came to a vote. Nor did it have any more luck in the Senate, where some Democrats were equally jumpy about spending, and the majority couldn't secure the necessary 60 votes for passage.

"Given the size of the current federal deficit, I have reservations about the federal government taking on greater responsibility for education funding," said Democratic Sen. Claire McCaskill of Missouri.

Teachers have been a powerful voice in Democratic Party politics. The two largest unions gave congressional Democrats more than $4 million in 2008 and have contributed more than $1.7 million so far in this election cycle.

Kim Anderson, the director of government relations for the National Education Association, the largest teachers union, said that given what schools and students were likely to face in the fall because of the layoffs and cutbacks, "We are struggling to see why people view this as a tough vote. We view this as a pretty common-sense vote. We really think (the layoffs) will have the most catastrophic impact on education that we have seen since the Great Depression."

Critics say the Education Department already received $100 billion in economic stimulus money and hasn't spent it all of it, so why should Congress approve more?

"Congress should not add to the nation's burgeoning public debt while states are still sitting on funds that were provided 15 months ago," said Republican Sen. Pat Roberts of Kansas.

Education Department officials said that most of the unspent stimulus money couldn't be used to prevent layoffs because it was obligated to other programs.

Education Department spokeswoman Sandra Abrevaya said the administration expected Congress to approve the emergency money after the weeklong Memorial Day recess.

A powerful force over the outcome could be the sour political mood, however, across the country and on Capitol Hill. A USA Today/Gallup Poll this week said that even as the public was growing optimistic about the economy, anger at the country's direction and incumbents was extremely high.

With a pivotal election in five months, lawmakers in both parties are operating on high alert. A range of issues could be affected, and there will be few hands across the aisle.

"We now cannot compromise because each party will react negatively to someone who wants to work with the other side," Cleaver said.

All republished content that appears on Truthout has been obtained by permission or license.

The European Union Times is reporting the true scale of BP’s oil spill, calling it “about to become the worst environmental catastrophe in all of human history threatening the entire eastern half of the North American continent with “total destruction”.”

Probably BP will *not* be able to plug the oil gusher due to the heavy pressure of water against the lighter oil at extreme ocean depth. The oil will travel clockwise around the Gulf current and then up the Eastern seaboard in the Gulf stream current. From there it will travel around the northern part of the Atlantic ocean and southwards. Any oil that is “dispersed” by evaporation will enter the atmospheric water and come down in rain.

BP and our government should stop trying to disperse the oil into the ocean and the atmosphere, and focus on how to sop up, sponge up, soak up, vacuum up, contain in whatever way, the oil and use it to make biofuel or send it to the refinery! The Obama administration should stop BP from using the dispersants and take over the clean-up, inviting every human being and nation and oil company to help in whatever way we can, and begin to clean out the oil from the ocean. Otherwise, this planet could be in serious trouble. It would be better for humanity to contain and recover the spill in the Gulf rather than disperse it into all our water world-wide.

Here is one idea for using hay & grass clippings to clean up the oil in a way it could be reused as fuel (*after* his “dispersant idea that is better than BPs but still not a good approach IMO.)

Someone should tell the politicians to read this EU article and to start looking for ways to get the oil *out* of the water and reuse it rather than disperse it into our ocean and atmospheric water because oil in water is toxic at just a few parts per Million. There will be plenty of time for the blame game *after* we work together to respond to the catastrophe.

Since when do we “disperse” any toxic spills? We **contain** them. This oil spill needs to be contained by finding ways to vacuum up, sop up, sponge up, or soak up, the oil from the water’s surface and prevent oil from getting into our atmosphere and into the world’s oceans.

A team of scientists and engineers working for the US administration and any volunteers that can be mustered, need to focus on containment and recovery and reprocessing of the oil.
–
Kathy Dopp
http://electionmathematics.org
Town of Colonie, NY 12304
“One of the best ways to keep any conversation civil is to support the discussion with true facts.”

Friday, May 28, 2010

Here is a false color view of the oil spill developed from some trick photography from a NASA satellite, causing the oil to appear in varying shades of cyan. The black-and-white shots below zoom in on a smoke plume emanating from the point marked by the white arrow and presumed to be due to a fire deliberately set to burn off some of the oil. These shots were published on May 20th and further details can be learned here.

Use this link to see a May 24th interview on CNN, where Jean-Michel Cousteau speaks on the likely magnitude of the ecological disaster we are facing and why we should be doing something about it now before it's too late.

NEW ORLEANS – A thick, 22-mile plume of oil discovered by researchers off the BP spill site was nearing an underwater canyon, where it could poison the foodchain for sealife in the waters off Florida.

The discovery by researchers on the University of South Florida College of Marine Science's Weatherbird II vessel is the second significant undersea plume reported since the Deepwater Horizon exploded on April 20. The plume is more than 6 miles wide and its presence was reported Thursday.

The cloud was nearing a large underwater canyon whose currents fuel the foodchain in Gulf waters off Florida and could potentially wash the tiny plants and animals that feed larger organisms in a stew of toxic chemicals, another researcher said Friday.

Larry McKinney, executive director of the Harte Research Institute for Gulf of Mexico Studies at Texas A&M University-Corpus Christi, said the DeSoto Canyon off the Florida Panhandle sends nutrient-rich water from the deep sea up to shallower waters.

McKinney said that in a best-case scenario, oil riding the current out of the canyon would rise close enough to the surface to be broken down by sunlight. But if the plume remains relatively intact, it could sweep down the west coast of Florida as a toxic soup as far as the Keys, through what he called some of the most productive parts of the Gulf.

The plume was detected just beneath the surface down to about 3,300 feet, said David Hollander, associate professor of chemical oceanography at USF.

Hollander said the team detected the thickest amount of hydrocarbons, likely from the oil spewing from the blown out well, at about 1,300 feet in the same spot on two separate days this week.

The discovery was important, he said, because it confirmed that the substance found in the water was not naturally occurring and that the plume was at its highest concentration in deeper waters. The researchers will use further testing to determine whether the hydrocarbons they found are the result of dispersants or the emulsification of oil as it traveled away from the well.

The first such plume detected by scientists stretched from the well southwest toward the open sea, but this new undersea oil cloud is headed miles inland into shallower waters where many fish and other species reproduce.

The researchers say they are worried these undersea plumes may be the result of the unprecedented use of chemical dispersants to break up the oil a mile undersea at the site of the leak.

Hollander said the oil they detected has dissolved into the water, and is no longer visible, leading to fears from researchers that the toxicity from the oil and dispersants could pose a big danger to fish larvae and creatures that filter the waters for food.

"There are two elements to it," Hollander said. "The plume reaching waters on the continental shelf could have a toxic effect on fish larvae, and we also may see a long term response as it cascades up the food web."

Dispersants contain surfactants, which are similar to dishwashing soap.
A Louisiana State University researcher who has studied their effects on marine life said that by breaking oil into small particles, surfactants make it easier for fish and other animals to soak up the oil's toxic chemicals. That can impair the animals' immune systems and cause reproductive problems.

"The oil's not at the surface, so it doesn't look so bad, but you have a situation where it's more available to fish," said Kevin Kleinow, a professor in LSU's school of veterinary medicine.

Tuesday, May 25, 2010

Monday, May 24, 2010

WASHINGTON, 7 NOVEMBER 2017*. Yesterday Speaker of the House Dennis Kucinich was sworn in as President, replacing President Jeb Bush, who had fled to Riyadh, Saudi Arabia, aboard Air Force One seeking asylum in his father's well guarded compound on the grounds of the Bin Laden family's palace. Vice President Dick Cheney, who has been in a coma since August after suffering his fifteenth heart attack, was declared incompetent. President Kucinich immediately announced a wide-ranging package of policies designed to bring an end to the Great Depression, which began with the global financial crisis of 2007. He called for calm and pleaded with leaders of the Revolutionary Tea Party Army that has encircled Washington to call off the attack that had been planned for today, the 100th anniversary of the Bolshevik revolution. Commandant Dick Armey said he is willing to meet for a discussion of a ceasefire so long as his militia can take their weapons home.

President Kucinich apparently ordered the Marines to invade Goldman Sachs headquarters in Manhattan early this morning. While there were some reports of small arms fire, most of the 6000 employees were reportedly removed without struggle and are on their way to various jails and prisons in the greater New York area. CEO Timothy Geithner was captured at La Guardia, attempting to board a private jet said to be headed for Riyadh. An anonymous source claimed that Geithner complained that President Bush had left him behind after promising protection. President Kucinich announced that Geithner would be charged with fraud, racketeering, and tax evasion. The case dates back to 2012 but had been put on hold when former President Sarah Palin ordered the attorney general's office to stop its investigation of the Treasury Secretary. President Kucinich said that Goldman, the last remaining bank in America, would be nationalized. He assured depositors that the bank would reopen next Monday under management of a team of presidential appointees led by William Black. All insured deposits will be protected, but it is believed that other claims will not be honored. FBI agents have reportedly moved to seize all assets of current and former Goldman employees. Warrants for the arrest of former Treasury Secretaries Paulson, Rubin, and Summers were also issued.

President Kucinich's package of policies includes universal and comprehensive debt cancellation. Under the plan, all private debts will be declared null and void. The implications are not immediately clear since delinquency rates have already reached 95% on most categories of debt. Several economists said that the new President was only validating reality, but others argued that it gave legal protection to squatters who have refused to leave their foreclosed homes over the past decade. The global movement for the "Year of Jubilee" had been pushing for such debt relief since the crisis began.

The policy proposals, which have been dubbed "New Deal 2.0", also include a universal job guarantee that would provide work and wages for the nation's estimated 75 million unemployed. The plan seems to follow a proposal that then-Representative Kucinich had introduced into the House in 2011. Funding for the program would be provided by Washington, but projects would be created and managed at the local level. At the time, Kucinich had argued that the program would "take workers as they are and where they are", providing a living wage to participants and useful public services and infrastructure to their communities. When asked how the government would pay for the program, Representative Kucinich had said at the time "by crediting bank accounts, of course—that's the only way a sovereign government ever spends." However, his bill had failed to get out of committee; it was revealed that large campaign contributions were subsequently made by hedge fund manager Pete Peterson to all committee members who had opposed the legislation—and although he was never accused of wrong-doing, it was long suspected that there might have been a connection.

President Kucinich also announced a new "Marshall Plan" for war-ravaged Europe, which has descended into near anarchy since the EU collapsed in late 2010. He called on the Italian Red Brigade army to end its siege of Berlin. He promised to begin an airlift of food for Europe's starving millions, to be followed by industrial products to help European nations to begin to produce for domestic consumption. He called for an end to fiscal austerity and argued that since each nation had adopted its own currency with the collapse of the euro, each now had the ability to "spend by crediting bank accounts." Hence, "whatever is technologically feasible is financially feasible."

Wall Street rallied on the news, with Nasdaq reaching a new high of nearly 250 and the Dow hitting 1150—the highest levels seen since the Great Crash of October 2011. The dollar also rose on the news, to $52 per Chinese RMB. Optimism spread to Japanese markets, with the yen remaining close to 132 per dollar.

In his statement, President Kucinich said that the long "nightmare" was coming to an end. He struck a conciliatory tone when he responded to a question about the actions of the administration of President Obama in the early years of the Great Depression, which many believe to have set the stage for the Great Crash. "Look, President Obama as well as his successors followed the advice of economists—who continually called for more fiscal austerity, much like the misguided physicians used to bleed patients to death. They were, and still are, clueless. I promise you that I will ban all economists from my administration. I will not seek, nor will I follow, advice from economists." After a decade of suffering over the course of the second Great Depression, the nation breathed a collective sigh of relief.

The President pointed to the experiences of China, India and Botswana, the only nations to escape the Great Depression. He recalled that just a decade ago, US GDP and the standard of living of the average American were many times higher than those in any of these nations. Indeed, Botswana was widely derided for its policies, which had generated hyperinflation. Yet, each of these countries had adopted a job guarantee and had developed programs that achieved full employment with wage and price stability. And while unemployment rose dramatically all around the globe, these three nations enjoyed full employment and rising living standards—indeed, all three have surpassed the US median real household income level. President Kucinich said that Botswana has offered to send advisors to help get America's fiscal and monetary policy back on track. He proclaimed that the days of misguided fiscal austerity are over, and promised to "spend whatever it takes to get our nation's workers and factories operating at full capacity."

In related news, a handful of economists have declared their support for President Kucinich's policies. Among them is former Fed Chairman Alan Greenspan, who had recanted his belief in free market economics early in the depression. Over the years he has moved ever further to the left as he embraced reforms ranging from socialized medicine to abolition of private ownership of the means of production.

While some economists have dismissed Greenspan's public statements as the rants of "a senile old man" others have noted that the statements have become remarkably cogent in contrast to the testimonies he used to provide as Chairman. An early disciple of Ayn Rand, Greenspan's recent testimonies now include obscure quotes from Marx, Lenin, and Rosa Luxemburg. He has also been calling for the elimination of the Fed, arguing that monetary policy and fiscal policy should be consolidated in the Treasury Department.

*Disclaimer: Some of the events reported here have not been fact-checked**. **Disclaimer: Actually, none of the events reported here has yet occurred, although some are quite likely.

***Blogger's Disclaimer: I am the author of the sole comment below. Please read it, because it's short, written in the same whimsical "back to the future" style, and VERY important.

The Old Enemies

So here’s how it is: They’re as mad as hell, and they’re not going to take this anymore. Am I talking about the Tea Partiers? No, I’m talking about the corporations.

Much reporting on opposition to the Obama administration portrays it as a sort of populist uprising. Yet the antics of the socialism-and-death-panels crowd are only part of the story of anti-Obamaism, and arguably the less important part. If you really want to know what’s going on, watch the corporations.

How can you do that? Follow the money — donations by corporate political action committees.

Look, for example, at the campaign contributions of commercial banks — traditionally Republican-leaning, but only mildly so. So far this year, according to The Washington Post, 63 percent of spending by banks’ corporate PACs has gone to Republicans, up from 53 percent last year. Securities and investment firms, traditionally Democratic-leaning, are now giving more money to Republicans. And oil and gas companies, always Republican-leaning, have gone all out, bestowing 76 percent of their largess on the G.O.P.

These are extraordinary numbers given the normal tendency of corporate money to flow to the party in power. Corporate America, however, really, truly hates the current administration. Wall Street, for example, is in “a state of bitter, seething, hysterical fury” toward the president, writes John Heilemann of New York magazine. What’s going on?

One answer is taxes — not so much on corporations themselves as on the people who run them. The Obama administration plans to raise tax rates on upper brackets back to Clinton-era levels. Furthermore, health reform will in part be paid for with surtaxes on high-income individuals. All this will amount to a significant financial hit to C.E.O.’s, investment bankers and other masters of the universe.
Now, don’t cry for these people: they’ll still be doing extremely well, and by and large they’ll be paying little more as a percentage of their income than they did in the 1990s. Yet the fact that the tax increases they’re facing are reasonable doesn’t stop them from being very, very angry.

Nor are taxes the whole story.

Many Obama supporters have been disappointed by what they see as the administration’s mildness on regulatory issues — its embrace of limited financial reform that doesn’t break up the biggest banks, its support for offshore drilling, and so on. Yet corporate interests are balking at even modest changes from the permissiveness of the Bush era.

From the outside, this rage against regulation seems bizarre. I mean, what did they expect? The financial industry, in particular, ran wild under deregulation, eventually bringing on a crisis that has left 15 million Americans unemployed, and required large-scale taxpayer-financed bailouts to avoid an even worse outcome. Did Wall Street expect to emerge from all that without facing some new restrictions? Apparently it did.

So what President Obama and his party now face isn’t just, or even mainly, an opposition grounded in right-wing populism. For grass-roots anger is being channeled and exploited by corporate interests, which will be the big winners if the G.O.P. does well in November.

If this sounds familiar, it should: it’s the same formula the right has been using for a generation. Use identity politics to whip up the base; then, when the election is over, give priority to the concerns of your corporate donors. Run as the candidate of “real Americans,” not those soft-on-terror East coast liberals; then, once you’ve won, declare that you have a mandate to privatize Social Security. It comes as no surprise to learn that American Crossroads, a new organization whose goal is to deploy large amounts of corporate cash on behalf of Republican candidates, is the brainchild of none other than Karl Rove.

But won’t the grass-roots rebel at being used? Don’t count on it. Last week Rand Paul, the Tea Party darling who is now the Republican nominee for senator from Kentucky, declared that the president’s criticism of BP over the disastrous oil spill in the gulf is “un-American,” that “sometimes accidents happen.” The mood on the right may be populist, but it’s a kind of populism that’s remarkably sympathetic to big corporations.

So where does that leave the president and his party? Mr. Obama wanted to transcend partisanship. Instead, however, he finds himself very much in the position Franklin Roosevelt described in a famous 1936 speech, struggling with “the old enemies of peace — business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.”

And that’s not necessarily a bad thing. Roosevelt turned corporate opposition into a badge of honor: “I welcome their hatred,” he declared. It’s time for President Obama to find his inner F.D.R., and do the same.

Monday, May 24, 2010

Blogger's Note: I've come to prefer photographs over cartoons to head my posts, because they generally seem more serious and are usually closer to the point. However, this is the third time I've run the cartoon below, which sums up this issue better than any photograph ever could. Just think of the character on the right as Peter G. Peterson or one of the 25 most successful hedge-fund managers who earned a billion dollars each last year ...and the person on the left as as one of the 20,000 recently laid-off school teachers.

The Challenge of Closing Tax Loopholes For Billionaires

Who could be opposed to closing a tax loophole that allows hedge-fund and private equity managers to treat their earnings as capital gains – and pay a rate of only 15 percent rather than the 35 percent applied to ordinary income?

Answer: Some of the nation’s most prominent and wealthiest private asset managers, such as Paul Allen and Henry Kravis, who, along with hordes of lobbyists, are determined to keep the loophole wide open.

The House has already tried three times to close it only to have the Senate cave in because of campaign donations from these and other financiers who benefit from it.

But the measure will be brought up again in the next few weeks, and this time the result could be different. Few senators want to be overtly seen as favoring Wall Street. And tax revenues are needed to help pay for extensions of popular tax cuts, such as the college tax credit that reduces college costs for tens of thousands of poor and middle class families. Closing this particular loophole would net some $20 billion.

It’s not as if these investment fund managers are worth a $20 billion subsidy. Nonetheless they argue that if they have to pay at the normal rate they’ll be discouraged from investing in innovative companies and startups. But if such investments are worthwhile they shouldn’t need to be subsidized. Besides, in the years leading up to the crash of 2008, hedge-fund and private equity fund managers weren’t exactly models of public service. Many speculated in ways that destabilized the whole financial system.

Nor are these fund managers especially deserving, as compared to poor and middle-class families that need a tax break to send their kids to college. Nor are they particularly needy. Last year, the 25 most successful hedge-fund managers earned a billion dollars each. One of them earned 4 billion dollars. (Paul Allen’s personal yacht holds two luxury submarines and a helicopter. Henry Kravis is one of the wealthiest people in the world.)

Several of these private investment fund managers, by the way, have taken a lead in the national drive to cut the federal budget deficit. The senior chairman and co-founder of the Blackstone Group, one of the largest private equity funds, is Peter G. Peterson, who never tires of telling the nation it faces economic ruin if deficits aren’t brought under control. Curiously, I have not heard Peterson advocate closing this tax loophole as one way to further the cause of fiscal responsibility.

Closing tax loopholes for billionaires may seem like a no-brainer, especially at a time when the nation is cutting back spending on the middle class — slashing budgets that fund child care, public schools, and public universities. Tens of thousands of teachers are getting pink slips.
But you can expect a huge fight.

There is also a moral issue here. Call me old fashioned but I just think it’s wrong that a single hedge fund manager earns a billion dollars, when a billion dollars would pay the salaries of about 20,000 teachers.
________________________________________________

Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including The Work of Nations, Locked in the Cabinet, and his most recent book, Supercapitalism. His "Marketplace" commentaries can be found on publicradio.com and iTunes.

Saturday, May 22, 2010

Reform Without Punishment

Friday, May 21, 2010 9:58 AM

By Daniel Gross

The Senate's passage Thursday night of far-reaching financial reform is being portrayed as a big loss for the financial sector. "No End to Banks' Capitol Punishment," reads the headline in The Wall Street Journal. But everything's relative. The legislative action is a defeat in large measure because Wall Street wanted no reform. And it seems like harsh punishment because the default situation for the last 30years has been that the financial sector gets precisely the regulation it wants.

Given what the financial sector put the nation through in the past three years, the case for punitive action was—and is—very compelling. But while there's stuff in there that the financial sector doesn't like, the legislation that is now headed to a House-Senate conference is, in fact, relatively tame.

Consider what's not in the bill. Earlier this year, President Obama came out in favor of the Volcker rule, which would have prohibited regulated banks from engaging in the enormously profitable (but risky) business of proprietary trading. That would have punished the large investment banks. It is not part of this legislation. There's been some discussion of a Tobin tax, the idea of levying a tax on financial transactions such as currency, stock, and derivative trades. That would raise revenue and provide disincentives for the socially useless algorithmic trading that creates risk for all investors. That would have punished many financial institutions. It is not part of the legislation. The House version of financial reform called for a $150 billion fund to be raised, largely by taxing big financial institutions, that would help wind down failed institutions. That would have exacted a significant (and, to my mind, justified) cost on big investment banks. It is not part of the Senate legislation. If health-care reform is any guide, the dynamics of Capitol Hill suggest that most House-Senate disputes are likely to be resolved in favor of the Senate.

Some of the most absurd prerogatives and loopholes are left untouched. This bill doesn't address carried interest, the absurd state of affairs under which private equity and hedge funds the ability to pay capital gains tax rates on money they make managing money for other people.

There are some areas in which the Senate goes further than the House. The Senate bill would, as The New York Times reports, "force big banks to spin off some of their most lucrative business into separate subsidiaries." And the legislation would push most derivatives trading onto exchanges, a move that would bite into the existing profits of some financial firms. (It's difficult to see how greater transparency and liquidity in a massive market hurts the industry as a whole.)

Of course, oversight and regulation are always seen as negatives by the industry. But as I've argued, industry frequently doesn't know what's best for it. The bill that's emerging doesn't tax trading, doesn't force the industry to fund its own recklessness in advance, and preserves vital tax breaks, and that puts consumer protection under the auspices of the Federal Reserve, a generally conservative institution. Punishment? More like a slap on the wrist.

Monday, May 17, 2010

Blogger's Note: As a member of the American Association for the Advancement of Science, I have received the magazine Science 51 weeks a year for 41 years. The obituary below is for a woman who edited for Science for practically the whole time. I was particularly shocked by the cause her of death.
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In Memoriam

Constance Holden, who has edited this page with her singular wit and style since it was launched 20 years ago, was tragically killed on 12 April in a traffic accident. Tancy, as she was fondly known to her many friends and colleagues, was struck by a military vehicle, part of the security forces for the nuclear summit being held in Washington, D.C., as she left the Science offices on her bycycle.

Tancy was an accomplished writer and editor for Science for almost 40 years. She covered the social and behavioral sciences, bioethics, and stem-cell research, delving into the genetics of behavior long before it was fashionable. She was a true original--warm, friendly, curious, direct, and always willing to challenge the conventional wisdom. She was also a talented artist and pianist. Her oil paintings grace colleagues' offices and the corridors of the AAAS building. The self-portrait above provides a unique view of a distinctive personality who has left her mark on this magazine. She will be deeply missed.

Tuesday, May 11, 2010

In a market where 70 percent of all trades are executed by computer algorithms via High Frequency Trading, Goldman Sachs has the power to make the market crash or rise at will.

Last week, the U.S. stock market suffered the greatest sudden drop in its history, for reasons that nobody on Wall Street can seem to decipher. But of all the explanations being examined—a tech glitch, Greek debt worries and fraud have all been discussed--the most troubling is not being given sufficient attention.

Coming on the very day that Congress considered two key financial reforms, the timing of the "flash crash" raises concerns that Wall Street is resorting to extreme tactics in its efforts to intimidate politicians who want to rein in the capital markets casino. Thursday's market plunge could have been an act of financial terrorism. Wall Street has both the motive and the means: Goldman Sachs, which is currently under investigation for a very different kind of fraud, has the trading power to make just such a market crash occur, and has much to lose from financial reforms moving through Congress.

On Thursday afternoon, the Dow Jones Industrial Average plummeted 700 points in about 10 minutes. A few hours later, top Democratic negotiators reached a compromise with Sen. Bernie Sanders, I-Vermont, over a plan to audit the Federal Reserve's secret bailout operations. The Fed has pumped nearly $4.3 trillion in bailout funds into the banking system since the onset of the crisis, and we know almost nothing about that money. The "Audit The Fed" amendment would finally tell the public the full extent of Wall Street's bailout operations.

Later Thursday night, Congress voted on—and rejected—an amendment that would have forced the break-up of the six largest U.S. financial behemoths into banks that can fail without wrecking the economy. Goldman Sachs would have been one of those six banks. Meanwhile, riots in Greece and inaction from the European Central Bank raised the possibility of major trouble for our financial titans across the pond.

This amalgamation of events is eerily similar to what took place on Sept. 29, 2008, after the U.S. House of Representatives shot down the Troubled Asset Relief Program. Immediately after the vote, big banks made the market plunge a record 778 points, sparking widespread fear and panic that helped convince Congress to eventually pass the bailout.

Can these conveniently timed market freak-outs be chalked up as a simple, if stunning, response to significant political events? Or is there something more sinister going on?

Right now, there is enough financial firepower concentrated in the hands of a few individuals to move the stock market whichever way these people want it to go. These 10-minute 700 point drops could very well be a precision-guided High Frequency Trading (HFT) attack designed to show Congress who's boss.

In today's stock market, 70 percent of all trades are executed by computer algorithms via High Frequency Trading. And Goldman Sachs completely dominates the HFT business, with a virtual monopoly over trading at the New York Stock Exchange, as Tyler Durden describes for Zero Hedge:

Goldman's dominance of the NYSE's Program Trading platform, where in addition to recent entrant GETCO, it has been to date an explicit monopolist of the so-called Supplementary Liquidity Provider program, a role which affords the company greater liquidity rebates for, well providing liquidity, and generating who knows what other possible front market-looking, flow-prop integration benefits. Yesterday [5/6/10], Goldman's SLP function was non-existent. One wonders -- was the Goldman SLP team in fact liquidity taking, or to put it bluntly, among the main reasons for the market collapse.

Importantly, Durden notes that in April, Goldman executed a huge proportion of trades for its own account—enough to significantly move the market, if it wanted to.

What is notable here is that of the 1.4 billion in principal shares, or shares traded for the firm's own account, Goldman was the top trader by a margin of over 100% compared to the second biggest program trader.

We have long claimed that Goldman is the de facto monopolist of the NYSE's program trading platform. As such, it is certainly the case that Goldman was instrumental in either a) precipitating yesterday's crash or b) not providing the critical liquidity which it is required to do, when the time came. There are no other options.

For further investigation, I turned to Max Keiser, who has written and authored similar Program Trading and HFT computer algorithms. I asked him if he thought this was an attack, and here is his response:

May 6th was an unequivocal act of domestic financial terrorism in America. A day that will live in infamy. To scare the lawmakers, themselves large owners of the very banks and stocks that they are supposed to be regulating, a financial weapon of mass destruction was put to their head and they acquiesced.

As the inventor of the continuous double-action, market-making technology (VST tech. US pat. no. 5950176) that is referenced 132 times by program trading and HFT patents since 1996, I can tell you that Goldman, JP Morgan and the gang simply pulled the "buys" from their computer trading programs and manufactured a crash. And when the coast was clear, and it was clear the politicians were not going to vote for anything that would break up the "too big to fail" banks; all the "sells" were pulled from the computers and the market roared back.

This is a Manchurian Candidate market where program trading bots start the ball rolling in whatever direction Wall St. wants the market to go -- and then hundreds of thousands of day traders watching Cramer on CNBC jump on the momentum bandwagon and commit the crime for the Wall St. financial terrorists, who then say, "It wasn't us, it was 'the market!'"

On Friday, the day after the "flash crash" and the defeat of the "break up the banks" amendment, Goldman just happened to be meeting with the SEC to work out a settlement in the Abacus fraud case.

These two major market crashes are not the only grounds for suspicion. On January 21 and 22 of 2010, President Barack Obama had a press conference and came out in favor of the Volcker Rule, which would have limited these HFT and "proprietary trading" schemes. At that time, the market dropped 430 points. Soon afterward, the Volcker Rule faded away and Obama has not seriously addressed this reform since then.

We know banks are willing to put the entire global economy at risk in order to pursue their own reckless profits. We also know that bankers at the largest U.S. financial firms are fighting like hell to keep their too-big-to-fail gun pointed at the head of the U.S. economy, and to keep their riskiest and most abusive activities beyond the scope of regulators. Consider what they've already accomplished over the past two years:

50 million Americans are now living in poverty, which is the highest poverty rate in the industrialized world;

30 million Americans are in need of work;

Five million American families foreclosed on, with 15 million expected by 2014;

50 percent of U.S. children will now use a food stamp during childhood;

Soaring budget deficits in states across the country and a record high national debt

Record-breaking profits and bonuses for themselves.

Motive and means are not enough to prove a case. You have to show that someone actually executed the dirty deed. But right now there is an alarmingly narrow scope of the calls for investigation into the flash crash. The SEC is considering "market manipulation" investigations, while members of Congress want to investigate whether technological malfunctions are to blame. But shouldn't somebody at least be looking into whether the flash crash was not merely fraud perpetrated for profit, but outright political intimidation—an act of economic terrorism? We'll never know if we don't investigate.

Breaking:This just out from the NY Times:
"[F]our giants of American finance managed to make money from trading every single day during the first three months of the year." Good luck? Or playing with totally stacked decks? Attention individual investors! You can't win.

Thursday, May 06, 2010

Above is the cover of the 9 April issue of the magazine Science and the abstract of the first of two articles in this volume treating a species newly added to the genus Homo. This abstract recognizes the fossil skeletons just discovered as being between 1.95 and 1.78 million years old and either on our family tree or not far off of it.

The second article is devoted to the geological context in which the new fossils were found, and the following figure copied from that article kind of got me to thinking...

I see those terrible "death trap" crevasses dropping straight down into those ancient caves, and then I notice the cartoons of two figures up top walking near one of them, and I began to think that one of the two likely stumbled into it and the other person very possibly tried to go down and save his/her companion, parent, or child ...and ended up suffering the same fate.

I have no idea of what their IQ's were back then, but the thought of the one sacrificing him/herself in an effort to save the other bespeaks true humanity in my view, and so I speak of them as persons.

In fact those long-ago folks were infinitely more human than the greedy blood-sucking corporations that the Supreme Court recently granted personhood. In fact, I sincerely doubt that a single CEO of any of those companies would lay down his/her life for anyone ...and most certainly not for their country.

Then I began to reflect on the Tea Party movement. Their IQ's probably average out the same as the rest of us. And probably they have compassion, if not for those of other races, at least for their family and friends.

Apparently, the problem with the Tea Baggers is either a lack of curiosity about the rest of the world or their holding the mistaken belief that they know all they need to know about the rest of the world from watching U.S. TV.

The least informed among them would be the ones who watch Fox News.

In fact there was a Zogby poll taken that asked the about 700 respondents whether or not they believed the 2004 Election was stolen, with the result that 39% said yes and 54% said it was legitimate. But when the results were grouped according to the TV news channel they watched the most, just one half of one percent of Fox viewers believed it to be stolen and 99% believed it honest. Among people who watched ANY other news source but Fox News, more felt the election was stolen than honest.

"...90 percent of the people I talked with were mired in a frightening morass of ignorance. They were unable to articulate even their own concerns in any concrete way, but, merely repeated slogans about “freedom” or “big government is taking over”. They were oblivious to all facts that contradicted what Glenn Beck, Rush Limbaugh and their Tea Party leaders have put forth."

Considering that the Teabaggers can't even articulate what's bothering them, I have a lot more sympathy for those two unfortunate paleolithic people.

These three short videos lucidly explain the illegal immigrant "problem" currently in the U.S. news, where the real "elephant in the room" is never mentioned.More at The Real News
If the video embedded above, entitled "U.S. Supported Economics Spurred Mexican emigration", no longer appears, please go here. More at The Real News
If the originally embedded video above does not appear, please go here.More at The Real News
If the originally embedded video above does not show, please go here.

Bio

Dan La Botz is a prominent labor union activist, academic, journalist, and author in the United States. He was a co-founder of Teamsters for a Democratic Union (TDU) and has written extensively on worker rights in the United States and Mexico. His writing appears frequently in Against the Current, Counterpunch, Labor Notes, Monthly Review, New Labor Forum and Z Magazine. He is the editor of Mexican Labor News & Analysis.

Arizona was the only territory west of Texas to secede from the Union and join the Confederacy during the Civil War. A century later, it fought recognition of the Martin Luther King Jr. federal holiday. This week, an anti-immigrant bill was signed into law by Republican Gov. Jan Brewer. Arizona Senate Bill 1070 empowers state and local law enforcement to stop, question and arrest whoever they suspect may not be in the state legally. The law is an open invitation to sweeping racial profiling and arbitrary detention.

The law ostensibly offers "cooperative enforcement of federal immigration laws throughout all of Arizona." It provides that a "law enforcement officer, without a warrant, may arrest a person if the officer has probable cause to believe that the person has committed any public offense that makes the person removable from the United States."

Thus, if a police officer suspects a Latino person of being an undocumented immigrant, he or she can lock that person up. Day laborers are targeted. It is illegal to accept (or make) a job offer in some roadside settings, and even makes "communication by a gesture or a nod" in accepting a work offer an arrestable offense. S.B. 1070 goes further, facilitating anonymous reporting of businesses that anyone suspects has undocumented employees.

President Barack Obama denounced the bill, saying: "Our failure to act responsibly at the federal level will only open the door to irresponsibility by others, and that includes, for example, the recent efforts in Arizona, which threaten to undermine basic notions of fairness that we cherish as Americans, as well as the trust between police and their communities that is so crucial to keeping us safe. In fact, I've instructed members of my administration to closely monitor the situation and examine the civil-rights and other implications of this legislation."

There is a serious backlash against the bill in Arizona and around the country. Rep. Raul Grijalva, Democrat of Tucson, Ariz., and co-chair of the Congressional Progressive Caucus, is front and center in opposing the controversial law. He told me: "It's a license to racially profile. It creates a second-class status for primarily Latinos and people of color in the state of Arizona. ... Arizona's been the petri dish for these kinds of harsh, racist initiatives."

Legal groups are mounting challenges to the law. Sunita Patel is a staff attorney with the Center for Constitutional Rights. According to Patel, "It allows the local law-enforcement agencies to check not only the FBI databases, which they've traditionally always done, it also allows them to sync up with immigration databases, which are notoriously unreliable because of errors with the data entry because they just have incorrect information on citizenship status ... so you have this very broad net being cast."

Grijalva is calling on the federal government to refuse to cooperate with Arizona. "Immigration is a federal law, and if we're asking the president for him not to cooperate in the implementation of this law through Homeland Security, through Border Patrol, through detention and a noncooperative stance by the United States government and the federal agencies, [it] would render much of this legislation moot and ineffective," he said.

He also is calling for people to boycott his own state: "I support some very targeted economic sanctions on the state of Arizona. We will be asking national organizations, civic, religious, political organizations not to have conferences and conventions in the state of Arizona. That there has to be an economic consequence to this action and to this legislation. And good organizations across this country, decent organizations that agree with us that this bill is patently racist, that it is unconstitutional and it's harsh, it's unjust, that they should refrain from bringing their business to the state."

Already, the American Immigration Lawyers Association has decided to move its fall 2010 annual conference from Arizona to another state. San Francisco Board of Supervisors member David Campos, saying that Arizona "with a stroke of a pen set the clock back on a generation of civil-rights gains," is confident that his resolution calling for the city to boycott Arizona will pass. Similar city boycotts are being considered in Oakland, Calif., and El Paso, Texas. Sportswriter David Zirin is supporting a boycott of the Diamondbacks, Arizona's major league baseball team.

Close to 30 percent of the Arizona population identifies itself as Hispanic. It was a boycott that eventually forced the state to recognize Martin Luther King Jr. Day. It is a shame that similar tactics are needed again.

* * *Denis Moynihan contributed research to this column.
***

Amy Goodman is the host of "Democracy Now!," a daily international TV/radio news hour airing on more than 800 stations in North America. She is the author of "Breaking the Sound Barrier," recently released in paperback and now a New York Times best-seller.

About Me

B.S. in Physics, Carnegie-Mellon University, 1960 Ph.D. in Physics, Brown University, 1966. Fellow, American Physical
Society. Fellow, American Association for the Advancement of Science.
Fellow, American Ceramic Society. Member, Geological Society of America, Research Physicist at Naval Research Laboratory (NRL), Washington, DC,
1967-2001. Fulbright-García Robles Fellow at Universidad Nacional
Autónoma de México, 1997. Invited Professor of Research at Universités
de Paris-6 & 7, Lyon-1, et St-Etienne (France) and Tokyo Institute
of Technology, 2000-2004. Adjunct Professor of Materials Science and
Engineering, University of Arizona, 2004-2005. Consultancy: impactGlass
research international, 2005-present.
Winner, one national and two international research awards and honored
by Brown University with a "Distinguished Graduate School Alumnus
Award." Author, 198 papers in peer-reviewed journals and books, Principal Author of 114 of these.